U.S.-affiliated money managers and firms that handle transition management appear to be the big winners in the recent wholesale restructuring of the Tokyo-based Government Pension Investment Fund's ¥4.7 trillion ($45 billion) allocation to actively managed domestic equities.
The record reshuffling the GPIF announced April 4 — with 10 new managers hired and eight terminated — left the domestic equity lineup for the world's largest pension fund sporting a “made in America” look.
Nine of the 14 firms the $1.24 trillion GPIF selected to pick Japanese stocks are either based in the U.S. — Capital International Inc., Goldman Sachs Asset Management, Dimensional Fund Advisors, Russell Implementation Services Inc., Harris Associates and Taiyo Pacific Partners — or are the Tokyo-based arms of U.S. managers: FIL Investments (Japan) Ltd., a unit of Fidelity Investments; J.P. Morgan Asset Management (Japan) Ltd.; and Invesco Asset Management (Japan) Ltd.
The latest lineup should put to rest any lingering fears of Japanese institutional investors playing inside baseball, according to some market veterans. “The home bias is all gone and best of class will prevail,” said one executive of a foreign firm hired by GPIF who declined to be named.
In the announcement, GPIF officials said the newly hired active domestic equity managers were consciously drawn from a “wide range of investment strategies” though only one — focused on “increasing shareholder value via engagement with company management” — was mentioned.
That firm is Kirkland, Wash.-based Taiyo Pacific Partners, which has $2.5 billion in assets under management. Brian K. Heywood, Taiyo founder and CEO, said the fact that his boutique, which focuses on “friendly” shareholder activism, successfully came through the GPIF's thorough yearlong vetting is a sign of just how aggressively the pension fund's staff is considering new ideas now.
He declined to provide any details on his firm's GPIF mandate. Executives at other GPIF-selected firms also declined to comment on any aspects of their assignments.